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TOS’s Week in Review for April 10, 2011

Noteworthy news and opinion items from the week ending April 10, 2011

1. The Budget Showdown

The top story of the week is that Republicans in Congress—having been elected in large part on their promise to cut this year’s federal spending by $100 billion—and having then retreated to $61 billion—finally retreated all the way down to $38 billion, which amounts to a 1 percent reduction in spending for the year. What matters here, however, is less the numbers than the compromise—which, throughout the week, was praised by some as a virtue and condemned by others as a vice. The Wall Street Journal reported that the Tea Party remained uncompromising:

A national tea party leader warned Republican leaders . . . that if they “fold” on the budget talks, they risk losing the trust of tea party voters.

“If [House Speaker John Boehner] agrees to less than $61 billion in cuts, then the GOP will have broken their campaign promise,” said Debbie Dooley, a national coordinator for the Tea Party Patriots, an umbrella group for the movement.

“If they fold on this, then they will fold on the debt ceiling and they will fold on budget 2012. Why should we trust them further to keep their promises?” said Ms. Dooley, a 52-year-old from Duluth, Ga., where she works in information technology.

Unfortunately, the WSJ itself—showing that its editors have no idea of the nature or consequences of compromise—called for compromise, claiming that “Republicans will have more credibility over fights that really matter if they show they’re willing to compromise now.” Would that the nation’s top business journal understood that compromising on principle thwarts one’s credibility (not to mention one’s integrity, and, in this case, individual rights and the economy).

Fortunately, others—including Dick Morris and Peter Schiff—understand the evil of this compromise. Morris made an impassioned plea for Americans to urge Republicans to hold their ground. If you want “to restore the United States of America to a free-enterprise, capitalist system,” says Morris, “be in touch with your Republican congressman, and send him a message: no retreat, no surrender, no compromise.” Morris’s short video is worth watching.

In the wake of the Republicans’ eventual capitulation, Peter Schiff explains that “politics has prevailed over principle.”

Both sides are now claiming victory, that this new compromise demonstrates the resolve of our leaders to make the necessary cuts so that America can live within its means and finally tackle our out-of-control deficit spending. The reality is, this compromise proves the exact opposite: that there is no will on Capitol Hill to do anything about the deficit, that nobody is willing to make any of the cuts necessary to reign in the excesses in Washington.

Schiff’s video is worth watching as well.


2. Paul Ryan’s Long-term Budget “Cuts”

In the midst of all this short-term budget compromising, Rep. Paul Ryan offered his long-term budget plan. Excerpt:

Our budget, which we call The Path to Prosperity, is very different. For starters, it cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt. Our proposal brings federal spending to below 20% of gross domestic product (GDP), consistent with the postwar average, and reduces deficits by $4.4 trillion…

Here are its major components:

• Reducing spending: This budget proposes to bring spending on domestic government agencies to below 2008 levels, and it freezes this category of spending for five years. The savings proposals are numerous, and include reforming agricultural subsidies, shrinking the federal work force through a sensible attrition policy, and accepting Defense Secretary Robert Gates’s plan to target inefficiencies at the Pentagon.

Welfare reform: This budget will build upon the historic welfare reforms of the late 1990s by converting the federal share of Medicaid spending into a block grant that lets states create a range of options and gives Medicaid patients access to better care. It proposes similar reforms to the food-stamp program, ending the flawed incentive structure that rewards states for adding to the rolls. Finally, this budget recognizes that the best welfare program is one that ends with a job—it consolidates dozens of duplicative job-training programs into more accessible, accountable career scholarships that will better serve people looking for work…

Read the whole thing here.

Many on the right, including Jed Graham and Karl Rove, have touted Ryan’s plan as a winner. As Graham puts it:

Calling for a fundamental restructuring of Medicare and Medicaid, Ryan’s plan cuts $6.2 trillion in spending relative to President Obama’s budget over the coming decade, including $179 billion in fiscal 2012.

With Republican presidential contenders heaping praise upon Ryan, his proposal may best represent the different vision of government that the GOP will offer voters in 2012 — one with lower taxes, much lower spending, less debt and a narrower safety net. . . .

Ryan’s cuts to spending in the coming decade include: The entire $1.4 trillion on ObamaCare health expansion; $735 billion on Medicaid spending, $923 billion on nonsecurity discretionary; $1.8 trillion on other mandatory programs; $389 billion on Medicare and $965 billion on interest.

Unfortunately, however, Ryan’s proposal does not actually amount to cuts in spending; nor does it include any means of eliminating entitlement programs—such as Medicare and Social Security—the altruistic black holes that increasingly suck up American’s hard-earned money and throttle the U.S. economy. As Karl Rove explains (unfortunately while praising Ryan’s proposal):

Mr. Ryan would have the government spend $40 trillion over the next 10 years, $6.2 trillion less than Mr. Obama’s budget plan of $46 trillion. This is an overall reduction in what the government plans to spend, not a cut from what it is spending today.

Under Mr. Ryan’s proposal, for example, health-care spending would still rise for both Medicaid, which serves the poor, and Medicare, which serves seniors. The $275 billion spent on Medicaid this year would grow to $305 billion in 2021 while the $563 billion spent on Medicare this year would grow to $953 billion in 2021. Nor would anyone 55 years or older be affected by any Medicare reforms.

Mr. Ryan and his colleagues want to act now to keep entitlement programs solvent. They want to keep Americans from experiencing the pain of the ­crisis that will come when the public debt has doubled by 2012 (from the level when Mr. Obama came into office) and nearly ­tripled by 2021, as it would under the president’s plan. Already mandatory spending, the part of the budget that’s automatic and not subject to approval each year by Congress, eats up all available revenue this year. Medicare goes broke in 2029, and Social Security is bankrupt in 2037. . . .

Read the whole piece here. Observe that while acknowledging that Ryan’s plan does not cut spending but in fact increases spending, Rove nevertheless praises the plan. For a brief discussion of why today’s Republicans do not and cannot oppose the welfare state, see The Republicans’ Opportunity to Restore America . . . and Their Obstacle. For a deeper discussion of the principles at play, see The Creed of Sacrifice vs. The Land of Liberty.

3. The Absurdity of Blaming a Florida Pastor for an Islamist Slaughtering Spree in Afghanistan

Daniel Pipes chronicles the obscene responses of politicians who have blamed a recent wave of Islam-motivated murders in Afghanistan on everything but the nature of Islamic law and the barbarians who enforce it. The piece begins:

When Pastor Terry Jones, 59, announced an intent to burn a Koran on the anniversary of 9/11 in 2010, the U.S. government, fearing attacks on American troops abroad, put intense pressure on him to desist and eventually he called off his plans.

Jones, however, did not cancel the ceremonial judgment of the Islamic scripture – he only delayed it by six months. On March 20, in a six-hour ceremony called “International Judge the Koran Day,” Jones convened a mock-judicial process in Florida that deemed the book “guilty of crimes against humanity,” then set a copy on fire.

The event was intentionally ignored in the United States, in the hopes of limiting its impact, but little stays secret in the Internet age. Within two days, news of the conflagration had reached Pakistan and Afghanistan, where the country’s presidents roundly denounced Jones, bringing his action to wide notice. On April 1, infuriated Afghans lashed out, killing twelve in the northern city of Mazar-i-Sharif; the next day, suicide bombers dressed in women’s clothing attacked a coalition base in Kabul and street mobs in Kandahar again killed twelve. . . .

Who is morally to blame for these deaths, Jones or the Islamists who seek to apply the laws of Islam in their entirety and as severely as possible? . . .

Read the whole thing here. For a discussion of the inherent conflict between religion and freedom of speech, see Religion vs. Free Speech.

4. Beheading Ourselves Over Islam

Just when you think Obama’s foreign policy can’t get any worse, the administration launches an effort to curb Islam-motivated terrorism by . . . spreading the religion of Islam. An Investor’s Business Daily editorial begins:

What can the U.S. do to quell the violent spasms of Islam? Promote Islam, naturally. At least that’s the thinking of this administration. It’s now official foreign policy.

President Obama’s top Muslim envoy has been overseas encouraging devotion to Islam, including in terror hot spots like Afghanistan. In fact, Rashad Hussain, U.S. special envoy to the Organization of the Islamic Conference, just returned from Afghanistan, where he told locals the antidote to Islamic violence “is Islam itself.”

“I am of the opinion that one of the strongest tools that you can use to counter radicalization and violent extremism is Islam itself, because Islam rejects violent extremism,” Hussain said during a speech in Kabul.

Afghans responded to his message by slaughtering a dozen innocent United Nations workers in the name of Islam.

Stirred by mosque sermons, a mob of thousands overran a U.N. compound in northern Afghanistan following Friday prayers. They sawed off the heads of two guards before killing the others, including Norwegian and Swedish nationals, inside. It was Afghanistan’s deadliest attack on U.N. personnel. . . .

Read the editorial here. It’s too rich for comment.

5. Bank Runs of the Early 1930s and FDR’s Ban on Gold

In light of the continuing increase in the price of gold, Richard Salsman provides a brief history lesson about the economic importance of using sound money and respecting property rights thereto. The article begins:

The gold price reached a record of $1464/ounce this week, fittingly on the 78th year anniversary of FDR’s ban on private gold ownership in 1933. Gold has increased by 30% over the past year, 145% in the past five years and 465% in the past decade; by contrast, the S&P 500 today is only 12% higher vs. a decade ago.

Although FDR’s Executive Order #6102 eventually expired, other measures were enacted to perpetuate the government’s ban on private gold holding. The prohibition wasn’t lifted until early 1975, in a bill signed by President Gerald Ford, but by then President Richard Nixon had jettisoned the Bretton Woods gold-exchange standard (in August 1971).

Thereafter the U.S. dollar “floated,” which in truth meant that over the long-term it only sunk in value versus gold. Thus a four-decade ban on private gold ownership (1933-1974) has been followed by a four-decade “ban” on any gold-based dollar (1971-2011), and thus fiat-paper dollars not unlike those issued to inflationary excess during the Revolutionary War (the “continental”) and the Civil War (the “greenback”).

In retrospect it seems astounding — and brazenly unconstitutional — that in 1933 a U.S. president could wield such power and by a mere pen stroke criminalize the private ownership of any asset, let alone an asset so crucial to one’s life and the nation’s economic prosperity as sound money. The U.S. dollar had been on the classical gold-coin standard for decades until World War I, when (in 1917) Washington compelled the commercial banks (for “patriotic reasons”) to transfer their clients’ vault gold to the Fed, in turn for mere gold “certificates.” This was a crucial step in politically distancing Americans from their long-valued money. . . .

Read the whole thing here.

6. A Win for Advocates of Free Market Education and Tax Credit Programs

This week brought some good news for freedom in education. As the Institute for Justice reports:

The U.S. Supreme Court today reversed the Ninth Circuit’s decision in Arizona Christian School Tuition Organization v. Winn, a legal challenge aimed at halting Arizona’s highly successful and popular private school scholarship tax credit program.  Today’s landmark decision declared that the plaintiffs in the case lack standing to bring the challenge in the first instance because the program is funded by private contributions, not government funds.

“Today’s decision marks the fifth time in recent years that the Supreme Court has rebuffed efforts by school choice opponents to use the courts to halt programs that empower families to choose a private school education if that is where their child’s needs will best be served,” said Tim Keller, executive director of the Institute for Justice Arizona Chapter.  “It is now crystal clear that only those individuals who have a direct stake in the outcome of a case have standing to challenge a school choice program in federal court.”. . .

“When Arizona taxpayers choose to contribute to [School Tuition Organizations], they spend their own money, not money the State has collected from respondents or from other taxpayers,” wrote Justice Anthony M. Kennedy, for the 5-4 majority.  “While the State, at the outset, affords the opportunity to create and contribute to [a School Tuition Organization], the tax credit system is implemented by private action and with no state intervention.  Objecting taxpayers know that their fellow citizens, not the State, decide to contribute and in fact make the contribution.”

“Like contributions that lead to charitable tax deductions, contributions yielding [School Tuition Organization] tax credits are not owed to the State and, in fact, pass directly from taxpayers to private organizations.  Respondents’ contrary position assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands.  That premise finds no basis in standing jurisprudence,” continued Kennedy.

Read the whole thing here. For more on this ruling, see High court recognizes the distinction between credits and subsidies and Supreme School Choice.

Observe that the Court’s ruling in this case “declared that the plaintiffs in the case lack standing to bring the challenge in the first instance because the program is funded by private contributions, not government funds.” As Justice Kennedy put it: “Contributions result from the decisions of private taxpayers regarding their own funds,” thus “Objecting taxpayers know that their fellow citizens, not the state, decide to contribute and in fact make the contribution.” A tax credit, Kennedy elaborated, “is not tantamount to a religious tax or tithe.” To say otherwise “assumes that income should be treated as if it were government property even if it has not come into the tax collector’s hands.” This is a feature of tax credit programs—not of school voucher programs—a distinction that all advocates of school choice would do well to recognize and respect. For a discussion of the nature and importance of this distinction, see Toward a Free Market in Education: School Vouchers or Tax Credits?

7. Richard Branson and Google to Map Ocean Floor

We’ll close with this wonderful story showing the kind of achievement possible to men of the mind when and to the extent that they are free to act on their judgment and pursue their goals. Enjoy!

Apparently, for billionaire adventurer Richard Branson, space is no longer the final frontier. Today, he announced his next ambitious project: Virgin Oceanic, which will see the mogul pilot a special ‘flying’ solo submarine to the deepest part of each of the planet’s five oceans—including the bottom of the Mariana Trench, 36,201ft down, a depth no human has yet reached.

Backed by an impressive team of scientists and explorers, Branson aims to “collate data and catalogue life forms that will never have been seen before by human eyes and are unknown to science”, according to a blog post he wrote to coincide with the launch. The Virgin Oceanic submarine he’ll pilot uses ‘flying wings’ to propel it downward, mirroring the way dolphins and rays swim.

Branson also hopes to improve our collective knowledge of the ocean floor: he’s partnering with Google, who will stream his dives on Google Maps. Images and video from the voyages will be added to Google Earth’s interactive map of the world, providing what Virgin calls “previously unachievable detail and documentation of one of the most unexplored areas of Earth.” . . .

Read the whole thing here.

We hope you enjoyed this edition of TOS’s Week in Review. Feel free to forward the link to others who might enjoy it as well.

(TOS does not necessarily agree with the content of articles to which we link.)

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